diff --git a/studio/backend/models/datasets.py b/studio/backend/models/datasets.py
index ca126948bb..49d8b4c419 100644
--- a/studio/backend/models/datasets.py
+++ b/studio/backend/models/datasets.py
@@ -41,12 +41,6 @@ class CheckFormatResponse(BaseModel):
     warning: Optional[str] = None
 
 
-class UploadDatasetRequest(BaseModel):
-    """Request for uploading a local training dataset file."""
-    filename: str = Field(..., description="Original filename, e.g. my_data.jsonl")
-    content_base64: str = Field(..., description="Base64-encoded file bytes")
-
-
 class UploadDatasetResponse(BaseModel):
     """Response with stored dataset path for training."""
     filename: str = Field(..., description="Original filename")
diff --git a/studio/backend/routes/datasets.py b/studio/backend/routes/datasets.py
index 2faa7121ac..302ac0aa9d 100644
--- a/studio/backend/routes/datasets.py
+++ b/studio/backend/routes/datasets.py
@@ -2,13 +2,12 @@
 Datasets API routes
 """
 import base64
-import binascii
 import io
 import json
 import sys
 from pathlib import Path
 from uuid import uuid4
-from fastapi import APIRouter, Depends, HTTPException
+from fastapi import APIRouter, Depends, HTTPException, UploadFile
 import logging
 
 # Add backend directory to path
@@ -38,7 +37,6 @@ from models.datasets import (
     CheckFormatResponse,
     LocalDatasetItem,
     LocalDatasetsResponse,
-    UploadDatasetRequest,
     UploadDatasetResponse,
 )
 
@@ -267,22 +265,12 @@ def _sanitize_filename(filename: str) -> str:
     return name
 
 
-def _decode_base64_payload(content_base64: str) -> bytes:
-    raw = content_base64.strip()
-    if "," in raw and raw.lower().startswith("data:"):
-        raw = raw.split(",", 1)[1]
-    try:
-        return base64.b64decode(raw, validate=True)
-    except binascii.Error as exc:
-        raise HTTPException(status_code=400, detail="Invalid base64 payload") from exc
-
-
 @router.post("/upload", response_model=UploadDatasetResponse)
-def upload_dataset(
-    payload: UploadDatasetRequest,
+async def upload_dataset(
+    file: UploadFile,
     current_subject: str = Depends(get_current_subject),
 ) -> UploadDatasetResponse:
-    filename = _sanitize_filename(payload.filename)
+    filename = _sanitize_filename(file.filename or "dataset_upload")
     ext = Path(filename).suffix.lower()
     if ext not in LOCAL_UPLOAD_EXTS:
         allowed = ", ".join(sorted(LOCAL_UPLOAD_EXTS))
@@ -291,16 +279,25 @@ def upload_dataset(
             detail=f"Unsupported file type: {ext}. Allowed: {allowed}",
         )
 
-    file_bytes = _decode_base64_payload(payload.content_base64)
-    if not file_bytes:
-        raise HTTPException(status_code=400, detail="Empty upload payload")
-
+    max_size_bytes = 512 * 1024 * 1024
     DATASET_UPLOAD_DIR.mkdir(parents=True, exist_ok=True)
-    # Normalize extension to lowercase so downstream suffix checks work
     stem = Path(filename).stem
     stored_name = f"{uuid4().hex}_{stem}{ext}"
     stored_path = DATASET_UPLOAD_DIR / stored_name
-    stored_path.write_bytes(file_bytes)
+
+    # Stream file to disk in chunks to avoid holding entire file in memory
+    size = 0
+    with open(stored_path, "wb") as f:
+        while chunk := await file.read(1024 * 1024):
+            size += len(chunk)
+            if size > max_size_bytes:
+                stored_path.unlink(missing_ok=True)
+                raise HTTPException(status_code=413, detail="File too large (max 512MB)")
+            f.write(chunk)
+
+    if size == 0:
+        stored_path.unlink(missing_ok=True)
+        raise HTTPException(status_code=400, detail="Empty upload payload")
 
     return UploadDatasetResponse(filename=filename, stored_path=str(stored_path))
 
diff --git a/studio/frontend/src/features/studio/sections/dataset-section.tsx b/studio/frontend/src/features/studio/sections/dataset-section.tsx
index b81dd058f6..a72c21100a 100644
--- a/studio/frontend/src/features/studio/sections/dataset-section.tsx
+++ b/studio/frontend/src/features/studio/sections/dataset-section.tsx
@@ -334,18 +334,6 @@ export function DatasetSection() {
     hfResults.length,
   );
 
-  const fileToBase64Payload = (file: File): Promise<string> =>
-    new Promise((resolve, reject) => {
-      const reader = new FileReader();
-      reader.onload = () => {
-        const value = String(reader.result ?? "");
-        const parts = value.split(",");
-        resolve(parts.length > 1 ? parts[1] : value);
-      };
-      reader.onerror = () => reject(new Error("Failed to read file"));
-      reader.readAsDataURL(file);
-    });
-
   const [isUploading, setIsUploading] = useState(false);
 
   const handleUploadButtonClick = () => {
@@ -367,11 +355,7 @@ export function DatasetSection() {
 
     setIsUploading(true);
     try {
-      const contentBase64 = await fileToBase64Payload(file);
-      const uploaded = await uploadTrainingDataset({
-        filename: file.name,
-        contentBase64,
-      });
+      const uploaded = await uploadTrainingDataset(file);
 
       selectLocalDataset(uploaded.stored_path);
 
diff --git a/studio/frontend/src/features/training/api/datasets-api.ts b/studio/frontend/src/features/training/api/datasets-api.ts
index 0f37ac53bf..f3098acc80 100644
--- a/studio/frontend/src/features/training/api/datasets-api.ts
+++ b/studio/frontend/src/features/training/api/datasets-api.ts
@@ -40,22 +40,15 @@ export async function checkDatasetFormat({
   return res.json();
 }
 
-type UploadDatasetArgs = {
-  filename: string;
-  contentBase64: string;
-};
+export async function uploadTrainingDataset(
+  file: File,
+): Promise<UploadDatasetResponse> {
+  const form = new FormData();
+  form.append("file", file);
 
-export async function uploadTrainingDataset({
-  filename,
-  contentBase64,
-}: UploadDatasetArgs): Promise<UploadDatasetResponse> {
   const res = await authFetch("/api/datasets/upload", {
     method: "POST",
-    headers: { "Content-Type": "application/json" },
-    body: JSON.stringify({
-      filename,
-      content_base64: contentBase64,
-    }),
+    body: form,
   });
 
   if (!res.ok) {